Ryanair Holdings Plc Q1 FY2025 earnings call

Key Points:

• Traffic grew 10%, but airfares were weaker than expected due to Easter timing and consumer spending pressure. Close-in bookings were disappointing for peak months.
• Operated the largest ever schedule with over 200 new routes in 5 new bases. Lauda extended leases on 3 A320s to 2028.
• Severe ATC delays in Europe due to understaffing in French, German, and Hungarian areas; ATC fees increased 15% since 2019.
• Over EUR7.8 billion to be returned to shareholders via buyback, with a final dividend of EUR200 million expected in September. ADS ratio changed to 1 ADS = 2 Ordinary Shares.
• Continued environmental efforts with Boeing Gamechanger and wing retrofit programs.

Ryanair reported Q1 profit of EUR360 million, a 46% decrease from last year's EUR663 million. Traffic was up 10% to 55.5 million customers, with revenue from traffic reaching EUR55 million. The fleet had 156 Gamechangers at the end of June, 20 aircraft less than budgeted. Fuel hedges were extended: 75% hedged for FY '25 at ~$79 a barrel, saving over EUR450 million, and 45% hedged for FY '26 at ~$78 a barrel. Just over half of the EUR700 million share buyback was completed. The company took delivery of 10 Boeing Gamechanger aircraft, and the wing retrofit program on NGs is on track to complete by 2026.

FY '25 traffic is expected to grow 8% to 198-200 million passengers, edging closer to 200 million. Unit costs are expected to rise modestly due to ex-fuel cost increases offset by fuel hedge savings and net interest income. Q2 pricing is softer than expected, with Q2 likely materially lower, dependent on close-in bookings. No full-year guidance yet, but H1 results will be provided in November.

• Severe ATC understaffing leading to delays, cancellations, and increased compensation costs.
• Delays in Boeing aircraft deliveries affecting fleet deployment and unit costs.
• Consumer under pressure due to higher interest rates impacting airfare pricing.
• High lease rates affecting competitors, though Ryanair owns most of its fleet.

Q: Stephen Furlong asked about ATC normalization and cost inflation A: Michael O’Leary discussed severe ATC understaffing, delays, and cost inflation in labor and airports, with ATC fees up 15% since 2019.

Q: Jarrod Castle inquired about fare demand and costs A: Michael O’Leary noted cyclical pricing, weaker close-in bookings, and cost inflation, but volume growth continues.

Q: Alex Irving questioned demand and ancillaries A: Michael O’Leary said demand is cyclical, ancillaries are flat, with structural cyclical factors.

Q: Harry Gowers asked about fare weakness and buyback A: Michael O’Leary said fare weakness is network-wide, buyback 50% complete, with possible top-up.

Q: Jaime Rowbotham asked about supply and maintenance A: Michael O’Leary discussed constrained supply, Boeing delays, and maintenance costs related to deliveries.